In a earlier article, we launched three tokenomic fashions for single-token blockchain video games and their respective execs and cons.
In this text, we’ll go over dual-token initiatives, an innovation that got here after single-token video games, which is the preferred mannequin as we speak.
The dual-token mannequin emerged within the first half of 2020 when Axie Infinity launched SLP (Smooth Love Potion) to cut back promoting strain on AXS, the unique sport token of Axie Infinity.
Since then, nearly all main titles have had a dual-token economic system.
To perceive how dual-token video games work and why this mannequin exists, we must always have a look at how Axie rolled out SLP.Before introducing SLP, Axie was a single-token GameFi, the place gamers enter USD and obtain the sport token, AXS. With large consumer development and cash from many PE funds supporting the market, Axie efficiently ran on only one token for over a yr.
However, it was not troublesome for Axie to comprehend how important new customers have been for the initiatives. Once new cash stopped coming in, a demise spiral would start.
To alleviate promoting strain on AXS, Axie launched SLP in 2020. Whereas AXS was used for governance and staking rewards, gamers would use in-game utility token SLP for breeding new Axies and incomes extra SLP. The growth workforce elevated the ratio of $AXS- $SLP required for breeding and elevated the quantity of $SLP wanted for replica.
At first, the brand new mannequin labored as deliberate. According to Footprint Analytics, AXS’s value roared proper after SLP was delivered to the sport, whereas SLP’s token value stood beneath $0.1 for a number of months. SLP had seen an uptrend drawn by newcomers for the reason that GameFi summer time.
However, this pattern didn’t final lengthy, and SLP quickly fell right into a demise spiral. The Axie workforce responded by altering the neighborhood governance construction to grow to be extra decentralized. They additionally eliminated SLP as the sport’s PVE (Player vs. Environment) yielded earnings on Feb. 9 to cut back SLPs mint and provide. With these adjustments, SLP’s value elevated.
The dual-token mannequin has solidified whereby one token is especially used for governance—proudly owning extra of this enables the holder to have extra voting energy in neighborhood votes concerning the venture—and one other is used for in-game features, i.e., the utility token. In most video games as we speak, gamers earn many of the yield within the normally lesser valued utility coin and a bit within the governance coin as a premium, e.g., in the event that they personal invaluable NFTs.
Besides Axie, a number of different widespread GameFi initiatives, akin to BinaryX and Starsharks, additionally use the dual-token mannequin.
Two totally different classes of twin tokens GameFiMost of the newly launched dual-token GameFi initiatives undertake the mannequin of the “enter sport token and output sport token” mannequin.
For instance, BinaryX gamers use governance tokens to start out the sport and yield utility tokens as returns, whereas Starsharks gamers begin and yield utility tokens within the sport.
We know from the earlier article that the associated fee and returns are extremely correlated to this mannequin’s token value. It is way simpler to regulate the tokenomic fashions with out centralized adjustment with the twin tokens than the USD value-based mannequin. The USD-based mannequin requires an oracle to specify the variety of corresponding tokens, which complicates the dual-token mannequin.
In this text, we offer an analytical strategy to dividing totally different classes of twin tokens GameFi: After the sale of Genesis NFT, what strategy does the venture proprietor use to extend the variety of NFTs out there to satisfy the demand for NFTs from new gamers?
In the start, many of the GameFi initiatives will promote Genesis NFT on the official platform or companion platforms akin to Binance NFT or Opensea to build up preliminary gamers. They then have a number of mechanisms to mint additional NFTs whereas fuelling token consumption. These embrace:
Breeding Model: In this mannequin, the second era NFTs and subsequent NFTs come from the breeding of Genesis NFTs, with no extra blind containers offered. This mechanism requires burning/spending tokens to mint the brand new NFTs, which permits the sport to affect the promoting strain on the tokens relying on the value of minting. Blind Box Model: Compared with the breeding mannequin, the blind field is easy. The workforce units the variety of NFTs within the sport, and when the market is sweet, or consumption goes up, gamers promote extra. This buoys the value of the tokens as a result of they want them to purchase the NFTs.However, all formidable, long-view initiatives will declare that many of the cash from blind field gross sales, whether or not in USDT or utility tokens, goes straight to the neighborhood treasury or burnt. Starsharks is so widespread as a result of it introduced to burn 90% of the utility tokens from blind field gross sales.
Summary of dual-tokens GameFi tokenomicsTokenomics are an important a part of a GameFi venture, together with metrics just like the variety of new gamers, the variety of lively gamers, and the distinction between output and consumption.
As GameFi evolves, every cycle sees new financial fashions and improvements, every with its personal execs and cons. Serious traders can even study to identify tendencies inside particular tokenomic fashions to time bottoms, predict FOMO inflation, generate yield throughout backside stabilization, and different methods.
An article initially by Watermelon Game Guild, edited by Footprint Analytics neighborhood.
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